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In March, Beijing central bank governor Zhou Xiaochuan roiled the global financial system by suggesting, in an essay aimed at an international audience, that a new reserve currency be adopted — one that could replace the U.S. dollar as the global currency predominantly used in trade between nations. Although not mentioning the dollar by name, there was little doubt what he meant. Zhou suggested that “special drawing rights” from the International Monetary Fund (IMF) be used as a global currency, based on shares held by member nations. Zhou cited the current global financial crisis as the main reason that relying on one currency is no longer feasible in a world where national economies are so interconnected. The fact that Zhou’s essay appeared closely behind remarks by Chinese Premier Wen Jiabao’s voiced concerns about U.S. assets didn’t help matters.

The financial world was further rocked when U.S. Treasury Secretary, Timothy Geithner, said that he was “open” to China’s proposal. Many took this statement at face value, fearing the worst: That the U.S. might actually back a move away from the U.S. dollar as the dominant currency in the world. As a result the U.S. dollar was savaged in a currency market bloodbath on March 25. However, Geithner was being diplomatic. Further remarks by Geithner made it clear. After saying that the Chinese proposal deserved consideration, and that he could see how it might benefit trade, he emphatically stated that there would be no global monetary union, and that replacing the U.S. dollar was very unlikely. A greenback recovery followed.

But talk about a global synthetic currency, based on special drawing rights from the IMF, has continued. The idea of a world monetary union is drawing continued attention on the imaginations — and fears — of world leaders, pundits and ordinary citizens. (Even Russia wants a global currency: A currency based on a gold standard.) Here are 20 resources that can help you sort out SDRs, past attempts at a world currency, and more.

The IMF and Its Global Currency (SDRs)

Here is some basic information on the International Monetary Fund and SDRs: Background, history and how it all works.

“About the IMF”: Learn about the International Monetary Fund from the source. The IMF was created in order to help coordinate international cash flow as countries worked together to rebuild after World War II. The IMF was originally designed to help maintain a stable system of monetary exchange based on the Bretton Woods system, which gasped its last when Nixon announced an end to the dollar’s peg to gold. The IMF’s role has dwindled somewhat over the years, but the latest financial crisis is bringing the body back to the forefront on international monetary policy. Recently, the G20 summit agreed to provide $750 billion in resources for the IMF.

“International Monetary Fund” from Wikipedia: Provides information in easy to digest format about the IMF, including criticism of the fund (notably from advocates of a free market system), as well as helpful information on voting rights and requirements for membership.

“Special Drawing Rights (SDRs)”: Once again, the source (the IMF) offers an overview. Special drawing rights are given to member countries, based on their quotas for providing financial commitment to the IMF. These rights represent a claim on the usable currencies of IMF nations. A basket of currencies (dollar, euro, sterling, yen) is used to provide the value of one SDR unit in relation to the U.S. dollar. However, SDRs haven’t been used for much beyond internal accounting since the collapse of the Bretton Woods system.

FACTBOX from Reuters: A concise, easy to understand look at SDRs, their history, and why some might find them appealing. SDRs were discussed at the G20 summit, but not in much detail. The idea of a monetary union remains rather distant and unlikely.

Aguments in Favor of Using SDRs

There are economists, policymakers and pundits who think that SDRs have their merits. However, many of them see a limited role for SDRs, rather than seeing them as a replacement for the U.S. dollar.

“How the Fund Can Help Save the World Economy”: This op-ed was written by Edwin M. Truman at the Peterson Institute for International Economics. While it falls short of calling for a global currency, it does offer an argument that using SDRs is possible in order to allocate funds to weaker economies in need of help. The idea is to use SDRs as a tool to help liquidity and reduce borrowing costs for hard-hit nations.

“Reform the International Monetary System”: The People’s Bank of China has posted the text of the essay from Zhou Xiaochuan online. It lays out a case for increased prominence for special drawing rights, and the pitfalls of relying overmuch on a single currency as a global reserve.

“We can’t ignore Zhou’s proposal for international reform”: This piece from Trade and Taxes lays out the reasons that U.S. policymakers should take Zhou seriously. Support for an expanded role for SDRs to supplement the U.S. The economists that write the blog put SDRs in context with Keynesian economics.

“One World, Once Currency” is a piece written by the Baha’i Association at the University of Florida. It’s an interesting look, from a spiritual standpoint, at the possible benefits of creating some sort of world currency.

Arguments Against SDRs as a World Currency

Unsurprisingly, the vast majority of opinion is against replacing the U.S. dollar with a global currency based on SDRs. While there are some that may not mind seeing the dollar dethroned, few are interested in the idea of a true world currency.

“China and the Dollar”: The Wall Street Journal lays out a case for retaining the U.S. dollar as the global reserve currency rather than diluting its influence through a global monetary union.

“Rebalancing Global Currency Reserves” offers a warning against complacency over a world currency based on SDRs. Instead, even though a world currency is not likely anytime soon, the U.S. should be vigilant about retaining its place.

Minnesota Representative Michele Bachmann thinks a world currency based on SDRs — or anything else – is a bad idea. She advocates a Constitutional Amendment, resolution or some other legislation to prevent the U.S. from every participating.

History of Other Proposed World Currencies

The idea of a world currency to ease trade is not a new one. At various points in history, attempts have been made to work off a single currency — at least for purposes of international trade.

“World Currency” from Wisdom 2 Trade provides a look at the history of the concept of a world currency as a currency that most international trade is conducted with — and how the U.S. dollar has actually fit that description.

“The Gold Standard Revisited” is an excellent look at the history of gold as a currency and the international monetary systems that tried to make a gold standard work.

A History of Monetary Unions by John Chown is a book — with excerpts in electronic format — that follows the history of monetary unions through the ages, including a look at world trade agreements based on gold and bimetallism, as well as the euro, Latin American unions Bretton Woods and more.

Other World Currency Resources

Here are some things that others are saying about a world currency, and how it might work.

“More On the New Monetary System…” Money and Markets asserts that in order for a global currency system to work, gold would have to be somehow involved. Also, RonPaul.com offers a video interview and transcript about why Ron Paul thinks a world currency might be a good idea — if gold were the basis.

“History of Money” from Economics Junkie provides a look at how global monetary forces led to the creation of the central bank system which is used throughout the world — including here in the United States as the Federal Reserve System.

In March, Beijing central bank governor Zhou Xiaochuan roiled the global financial system by suggesting, in an essay aimed at an international audience, that a new reserve currency be adopted — one that could replace the U.S. dollar as the global currency predominantly used in trade between nations. Although not mentioning the dollar by name, there was little doubt what he meant. Zhou suggested that “special drawing rights” from the International Monetary Fund (IMF) be used as a global currency, based on shares held by member nations. Zhou cited the current global financial crisis as the main reason that relying on one currency is no longer feasible in a world where national economies are so interconnected. The fact that Zhou’s essay appeared closely behind remarks by Chinese Premier Wen Jiabao’s voiced concerns about U.S. assets didn’t help matters.

The financial world was further rocked when U.S. Treasury Secretary, Timothy Geithner, said that he was “open” to China’s proposal. Many took this statement at face value, fearing the worst: That the U.S. might actually back a move away from the U.S. dollar as the dominant currency in the world. As a result the U.S. dollar was savaged in a currency market bloodbath on March 25. However, Geithner was being diplomatic. Further remarks by Geithner made it clear. After saying that the Chinese proposal deserved consideration, and that he could see how it might benefit trade, he emphatically stated that there would be no global monetary union, and that replacing the U.S. dollar was very unlikely. A greenback recovery followed.

But talk about a global synthetic currency, based on special drawing rights from the IMF, has continued. The idea of a world monetary union is drawing continued attention on the imaginations — and fears — of world leaders, pundits and ordinary citizens. (Even Russia wants a global currency: A currency based on a gold standard.) Here are 20 resources that can help you sort out SDRs, past attempts at a world currency, and more.

The IMF and Its Global Currency (SDRs)

Here is some basic information on the International Monetary Fund and SDRs: Background, history and how it all works.

“About the IMF”: Learn about the International Monetary Fund from the source. The IMF was created in order to help coordinate international cash flow as countries worked together to rebuild after World War II. The IMF was originally designed to help maintain a stable system of monetary exchange based on the Bretton Woods system, which gasped its last when Nixon announced an end to the dollar’s peg to gold. The IMF’s role has dwindled somewhat over the years, but the latest financial crisis is bringing the body back to the forefront on international monetary policy. Recently, the G20 summit agreed to provide $750 billion in resources for the IMF.

“International Monetary Fund” from Wikipedia: Provides information in easy to digest format about the IMF, including criticism of the fund (notably from advocates of a free market system), as well as helpful information on voting rights and requirements for membership.

“Special Drawing Rights (SDRs)”: Once again, the source (the IMF) offers an overview. Special drawing rights are given to member countries, based on their quotas for providing financial commitment to the IMF. These rights represent a claim on the usable currencies of IMF nations. A basket of currencies (dollar, euro, sterling, yen) is used to provide the value of one SDR unit in relation to the U.S. dollar. However, SDRs haven’t been used for much beyond internal accounting since the collapse of the Bretton Woods system.

FACTBOX from Reuters: A concise, easy to understand look at SDRs, their history, and why some might find them appealing. SDRs were discussed at the G20 summit, but not in much detail. The idea of a monetary union remains rather distant and unlikely.

Aguments in Favor of Using SDRs

There are economists, policymakers and pundits who think that SDRs have their merits. However, many of them see a limited role for SDRs, rather than seeing them as a replacement for the U.S. dollar.

“How the Fund Can Help Save the World Economy”: This op-ed was written by Edwin M. Truman at the Peterson Institute for International Economics. While it falls short of calling for a global currency, it does offer an argument that using SDRs is possible in order to allocate funds to weaker economies in need of help. The idea is to use SDRs as a tool to help liquidity and reduce borrowing costs for hard-hit nations.

“Reform the International Monetary System”: The People’s Bank of China has posted the text of the essay from Zhou Xiaochuan online. It lays out a case for increased prominence for special drawing rights, and the pitfalls of relying overmuch on a single currency as a global reserve.

“We can’t ignore Zhou’s proposal for international reform”: This piece from Trade and Taxes lays out the reasons that U.S. policymakers should take Zhou seriously. Support for an expanded role for SDRs to supplement the U.S. The economists that write the blog put SDRs in context with Keynesian economics.

“One World, Once Currency” is a piece written by the Baha’i Association at the University of Florida. It’s an interesting look, from a spiritual standpoint, at the possible benefits of creating some sort of world currency.

Arguments Against SDRs as a World Currency

Unsurprisingly, the vast majority of opinion is against replacing the U.S. dollar with a global currency based on SDRs. While there are some that may not mind seeing the dollar dethroned, few are interested in the idea of a true world currency.

“China and the Dollar”: The Wall Street Journal lays out a case for retaining the U.S. dollar as the global reserve currency rather than diluting its influence through a global monetary union.

“Rebalancing Global Currency Reserves” offers a warning against complacency over a world currency based on SDRs. Instead, even though a world currency is not likely anytime soon, the U.S. should be vigilant about retaining its place.

Minnesota Representative Michele Bachmann thinks a world currency based on SDRs — or anything else – is a bad idea. She advocates a Constitutional Amendment, resolution or some other legislation to prevent the U.S. from every participating.

History of Other Proposed World Currencies

The idea of a world currency to ease trade is not a new one. At various points in history, attempts have been made to work off a single currency — at least for purposes of international trade.

“World Currency” from Wisdom 2 Trade provides a look at the history of the concept of a world currency as a currency that most international trade is conducted with — and how the U.S. dollar has actually fit that description.

“The Gold Standard Revisited” is an excellent look at the history of gold as a currency and the international monetary systems that tried to make a gold standard work.

A History of Monetary Unions by John Chown is a book — with excerpts in electronic format — that follows the history of monetary unions through the ages, including a look at world trade agreements based on gold and bimetallism, as well as the euro, Latin American unions Bretton Woods and more.

Other World Currency Resources

Here are some things that others are saying about a world currency, and how it might work.

“More On the New Monetary System…” Money and Markets asserts that in order for a global currency system to work, gold would have to be somehow involved. Also, RonPaul.com offers a video interview and transcript about why Ron Paul thinks a world currency might be a good idea — if gold were the basis.

“History of Money” from Economics Junkie provides a look at how global monetary forces led to the creation of the central bank system which is used throughout the world — including here in the United States as the Federal Reserve System.